NINJA MCQ - Gov't Subsection A

Question 1

Governmental funds accounting equation

Answer 1

The accounting equation is:
Current Assets - Current Liabilities = Fund Balance, and

Revenues - Expenditures + Other financing sources - Other financing uses = Increase (Decrease) in Fund Balance.

Operations are measured in terms of sources and uses of working capital (governmental units are not required to prepare a Statement of Cash Flows). Net income is not measured.

Question 2

Expenditures under Modified Accrual accounting

Answer 2

Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term debt, which should be recognized when due.

Question 3

Most difficult characteristics of service efforts and accomplishments for a governmental entity to report?

Answer 3

Relevance

Based on the diversity of the needs of the audience of potential users, the cost of developing relevant information that is capable of making a difference in a user’s assessment of a problem, condition, or event may be illusive and/or cost prohibitive.

Question 4

In summary, expenditures are recognized at one of three points:

Answer 4

(1) when goods/services are acquired
(2) when goods/ services are used or consumed
(3) when payment for goods/ services is due

Question 5

Expenditures recognized when (1) When goods/ services are acquired

Answer 5

(1) When goods/services are acquired—Capital assets, salaries, contracted services, materials and supplies (purchases method), prepaid items (purchases method), etc. Indeed, this is the point at which a fund liability is incurred unless there is an expenditure recognition modification.

Question 6

Expenditures recognized when (2) When goods/ services are used or consumed

Answer 6

(2) When goods/services are used or consumed—Known as the consumption method, recognition at this point is permitted for materials and supplies and prepaid items such as insurance, but is never required in governmental funds.

Question 7

Expenditures recognized when (3) When payment for goods/ services is due

Answer 7

(3) When payment for goods/services is due—Debt service on general long-term debt and the types of expenditures referred to in item b.(4) above—compensated absences, claims and judgments, special termination benefits, pensions, other postemployment benefits, pollution remediation, and so on.

Question 8

Fiduciary funds have what type of focus:

Answer 8

Economic resources focus